* Talks of improved U.S.-China ties boosts risk appetite
* 10-year U.S., German yields hit one-week highs
* U.S. jobs data due 1230 GMT
* EBA to publish stress test results at 1700 GMT
By Virginia Furness
LONDON, Nov 2 (Reuters) - Euro zone government bond yields rose on Friday ahead of U.S. jobs data, and after reports that U.S. President Donald Trump is taking steps to resolve a trade war with China fuelled a bid for riskier assets.
Asian equities jumped to three-week highs after Bloomberg reported that Trump is seeking a trade agreement with Chinese President Xi Jinping, setting the tone for a strong European open which saw stocks there gain 1.1 percent.
“We’ve seen a correction of the very pessimistic mood by investors, driven by decent earnings and some good news regarding the trade spat,” said Rene Albrecht, analyst at DZ Bank.
“But this looks like election tactics by Trump with the mid-terms next week. With stock markets diving he probably felt the need to counteract.”
Both 10-year U.S. Treasury bond yields and 10-year German yields - key safe-haven assets - rose to their highest in over a week, up three basis points each early on Friday.,
Most other higher-grade euro zone government bond yields were 2-4 basis points higher.,.
The improved risk appetite helped fuel demand for Italy, with its bond yields falling up to five basis points. ,
Albrecht said the upcoming U.S. mid-term elections meant the selloff in risk assets would be limited.
Further direction might come from the U.S. jobs report due at 1230 GMT, with investors looking for more indications on the health of the U.S. economy and the pace of further Federal Reserve interest rate rises.
U.S. job growth is expected to have rebound in October with wages expected to have recorded their largest annual gain in 9-1/2 years, pointing to further labour market tightening that could encourage the Fed to hike again in December.
Data on Thursday showed worker productivity slowed in the third quarter, which tempered the rise in yields in late trade, according to an analysis by ING.
“There is perhaps a bit more evidence the U.S. is starting to feel the negative effects of trade uncertainty, higher interest rates and the stronger dollar,” analysts at the bank wrote in a note published on Friday.
After the market close, the European Banking Authority will release the results of its latest stress tests. Analysts will be looking to see how a lengthy selloff in Italian government bonds has affected the balance sheets of the four Italian banks surveyed. (Reporting by Virginia Furness; editing by John Stonestreet)